Chris Hoeppner presents to the Estate Planning Council of Abbotsford May 21, 2014

1. Tapping into Canada’s Fastest Growing Segment
Chris Hoeppner
BDM, BC Fraser Valley
CELL: 778-229-8555
E-MAIL: choeppner@chip.ca

2.  Baby boomers are now in their mid 60’s
 Cost of living is high, pensions are low,
life expectancy is long, and many don’t
have enough invested.
 The average person 55-65 has
approximately $125,000 in RRSP’s
 There are 1000 people turning 65 every
day in Canada.
 According to a 2013 Harris/Decima Poll,
59% of retirees in BC are carrying debt,
and 54% of them carrying more than 1
form of debt.
The Need For CHIP
Canada’s Fastest Growing Challenge

3. Company Overview
 The Canadian Home Income Plan (CHIP) is provided by HomEquity Bank.
 In business since 1986
 Received schedule 1 bank status in October 2009
 Partner with most major banks, credit unions, and mortgage brokers in Canada
 Canada’s only provider of a reverse mortgage
Who is CHIP an option for?
Homeowners 55 or older who……
Have a house, townhouse, or condo with at least 50% equity
Want to increase cash flow

4. CHIP Program Information
NO PAYMENTS REQUIRED!
 No credit check, no income
qualification, and no medical
requirement.
 Protects cash flow even when rates are
rising.
 The money can be taken all at once,
lump sums as needed, or even as an
automatic monthly deposit.
 Access UP TO 50% LTV depending on
property type and age. The older the
client, the more they qualify for.
 CHIP guarantees that your balance
owing will never exceed the fair market
value of the home at the time it is sold

5. Home Equity Preservation with
the use of $100K over 15 years
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
Initial Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15
CHIP Home Income Plan
Solution
$200,000
67%
$520, 982
71%
Home Equity
CHIP Home Income Plan
Home Equity Appreciation: 6.10% (15-year national average at as February 2012. Source: CREA)
CHIP Home Income Plan: 4.95% initial interest rate.
Let’s do the math even with just 3% property appreciation:
• Value $300,000 x 3% = $9000 appreciation
• CHIP of $100,000 x 4.95% interest rate = $4950 in interest

6. CHIP Home Income Plan
Unlock the value of their biggest asset
Common Reasons For A CHIP:
 Increase monthly cash flow in retirement
 Purchase a new primary residence. Downsize or upgrade
 Replace income from deceased spouse
 Keep up with rising costs as you age
 Poor credit or low qualifying income
 Assist children with down payment needs
 Renovations or increased travel
 Purchase a vacation property

7. Examples
 #1. Mr & Mrs Smith are 75 and 79 years old
 Mr still works nearly full time to make the payment on their $420,000
mortgage.
 House is worth $980,000 and they just can’t imagine having to move all
their things at this age, plus Mrs had a stroke recently and they want to
stay put.
 Broker suggested they consider CHIP to lower payments and possibly
allow Mr to finally retire at 79 and spend time with his wife.
 Funded a new CHIP for $430,000 to pay off the existing mortgage,
leaving the Smiths with no monthly payments other than utilities, and
allowing Mr to finally stop working.

8. Examples cont’d….
 #2. Mrs Jones is 67 years old and lives by herself on an ALR property
 Home is worth $375,000 and she qualifies for $137,000 from CHIP
 Has lung cancer, can’t work, and lives on her government pensions. As a
result, she fell 3 years behind on property taxes and has been notified the
city is putting her house up for auction in a tax sale if she doesn’t pay
 Has a 1st
with TD for $60k, $50k in assorted other debts, and owes the
back taxes
 Client was turned down everywhere until someone finally suggested
CHIP. We funded 1 day before she lost her house, paid off all her debts,
put $20k extra in her bank account, and she can now live in her home as
long as she wants with no payments other than utilities.
 As a plus, now that her property taxes are current, she can now apply to
defer them going forward.

9. Examples cont’d….
 #3. 75 year old couple with a home in Ladner worth $700,000.
 Tired of yard work and house maintenance, so want to move to a
downtown Vancouver condo worth $1 million.
 With limited income, they don’t qualify for an upgrade mortgage of
$300,000, nor could they live a comfortable retirement with a payment
that large.
 Solution was to sell the Ladner home, put $600,000 down on the condo,
and take a CHIP for $400,000 to complete the purchase.
 The end result was they had about $50k in cash left in the bank, Zero
payment on the CHIP, and they still have $600k equity in the condo. As
long as it appreciates at roughly 2%/yr, they’ll maintain that equity.
Instant upgrade with no change to cash flow.

10. Reverse Mortgages – Canada vs USA
Canada USA
Set up fees consist of legal and
appraisal
Set up fees consist of legal and
appraisal + fee up to $6000 +
Insurance Premium of .5%-2.5% +
annual insurance premium of 1.5%
+ monthly service fee.
Automatic renewal at end of term. Clients typically need to requalify at
the end of the term, and may not be
renewed.
CHIP guarantees the client will
never owe more than the fair market
value of the home at the time it is
sold
Seniors have been sued for any
shortfall when selling for less than
what’s owed.
As a schedule 1 bank, rates run
around posted, and there are no
fees after set up. Plus, the max
loan is 50% of the value.
Rates are higher, fees are higher
and ongoing, and loan amounts are
more aggressive.

11. CHIP Home Income Plan
Solution
Set-up Process
• Appraisal fee: $240 - $400
• Independent legal advice: $300 - $600
• Legal & closing costs:
Term Closing Fees
Variable $1,495
6 Month $1,495
1 Year $1,495
3 Year $995
5 Year $595
Additional
Funds
Add $500 to the above
closing fee for the term
you choose

12. Conclusion
 For clients with good credit, and good cash flow, a secure line of credit is
typically the better solution
 For clients where cash flow is the real issue, yet there is equity in the
home, a reverse mortgage might be more appropriate
 While CHIP isn’t for everyone, there are more and more retirees in
Canada finding themselves asset rich but cash poor, and knowing about
this solution could end up being a life changer for them.

13. Unlock the value of their biggest asset
www.chipadvisor.ca
Chris Hoeppner
BDM - BC Fraser Valley
Cell: 778-229-8555
Email: choeppner@chip.ca